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Change is coming for healthcare

PHARMABOARDROOM
14 May 2019
A nurse simulates the preparation of a vaccine doze against pandemic Influenza A (H1N1). REUTERS. A nurse simulates the preparation of a vaccine doze against pandemic Influenza A (H1N1). REUTERS.
Globally, the healthcare sector is entering a lengthy period of heightened introspection. That process has been turbocharged by the resurgence of healthcare as a dominant social and political issue in the US—the irony of which isn't lost on me, given the general reluctance today of the US to actively drive much of anything globally. Pressure testing the way we currently develop, deliver, and pay for healthcare is necessary, because it's clear our current trajectory is suboptimal at best (as evidenced by voters who are unhappy with the status quo) and unsustainable at worst (with healthcare cost growth eclipsing GDP growth). But for all the sound and fury over issues like drug pricing and insurance premiums, I think it's only a matter of time until we're forced to reconcile a couple of underlying strategic issues.

We're beating around the bush

First, are our existing models and proposed solutions fit for purpose? I've broached this issue in previous editions in terms of dimmer prospects for multilateral healthcare institutions amidst rising nationalism, but here I'm referring to the mechanics of the life sciences landscape itself. Take, for instance, the global conversation around drug pricing. The panoply of initiatives that are being discussed (eg, increasing generics penetration, linking reimbursements to efficacy, capping prices altogether) are mostly rooted in a world defined by mass-marketed conventional, small molecule drugs.

That's increasingly not the world we live in, as drug firms eke out innovation in newer areas such as genomic medicine and rare or neglected therapeutic diseases—products that are far less scalable and able to be commoditized and whose cost dynamics are likely to be much more rigid than their forebears. Efforts to reduce the financial burden of biologics with more optimized use of biosimilars are nearly as misguided, as regulatory measures do little to address root causes of suboptimal biosimilar use, such as healthcare workers' reluctance to prescribe them.

Second is the issue of trust in the system of policies and institutions that govern healthcare. The situation is dire, sparing no stakeholders in the healthcare system. Payors are under scrutiny for macro issues such as the logic they employ to decide who and what is covered and for their role in the cost of care as a whole, as well as for specific issues like so-called surprise billing in the US. Providers, too, face a bevy of challenges to their remit globally. Healthcare workers are embroiled in the US's far-reaching opioid catastrophe, with allegations ranging from relatively benign (eg, misapplication of the US Centers for Disease Control's guidelines on opioid prescribing) to outright criminality. Abroad, skepticism over healthcare workers' motives continues to impede the response to epidemics such as Ebola in West Africa and the Democratic Republic of Congo, and sporadic cases of polio in Afghanistan, Pakistan, and Nigeria. In the current environment, pharma is public enemy number one, with the ignominious distinction of straddling most of the political, economic, and social issues du jour, from the cost of its products to its alleged role in the opioid crisis.

The search for solutions will make healthcare more political

We are likely looking at a protracted era of instability for the healthcare sector, as its motives and value proposition are dissected and redrawn. Healthcare will become more political in the process, in two ways. On the surface, heads of state and regulatory officials will talk about healthcare more frequently, particularly during campaign season—something we saw during the spate of emerging market elections in 2018 and will witness in the run-up to the US presidential election in 2020. But more substantively, tough conversations are looming over fundamental issues, from vaccination and public health as social and political agreements, to healthcare reform as a common good (eg, a healthcare “new deal,” anyone?). The contours of a solution are still elusive, but one thing is for sure: the role of corporations—and pharma's in particular—will be a persistent theme. It's best to start planning now.

This article was originally published on Pharmaboardroom.com.
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Eurasia Group Healthcare Practice Head Aditya Bhattacharji.
Aditya Bhattacharji manages Eurasia Group's healthcare analysis, advising multinational healthcare and life sciences firms on the risks and opportunities stemming from health policy, particularly in emerging markets. He addresses a variety of issues including healthcare reform, innovation, drug pricing, market access, and public health crises, as well as their intersection with global macro themes.
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